2015 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-28-2015

Kenset Corp v. Hratch Ilanjian

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Recommended Citation

"Kenset Corp v. Hratch Ilanjian" (2015). 2015 Decisions. Paper 85.

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PSM4-045 NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

Nos. 12-3742 & 14-3255 

___________

KENSET CORPORATION

v.

HRATCH Z. ILANJIAN,

Appellant

____________________________________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(D.C. Civil Action No. 2:11-cv-02464)

District Judge: Honorable Legrome D. Davis

____________________________________

Submitted Pursuant to Third Circuit LAR 34.1(a)

January 21, 2015

Before: FISHER, KRAUSE and VAN ANTWERPEN, Circuit Judges

(Opinion filed: January 28, 2015)

___________

OPINION*

___________

PER CURIAM

 

* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.
2

Operating out of an apartment in Secane, Pennsylvania, Hratch Ilanjian convinced 

Vicken Setrakian, the president of Kenset Corporation (“Kenset”), that he was an 

international businessman who could help Kenset turn around its party-supply business in 

the Middle East. Over a course of months, Setrakian and Ilanjian exchanged e-mails

regarding Ilanjian’s credentials and about Kenset and its possible need for new business 

strategies. On Ilanjian’s repeated requests, Setrakian provided Ilanjian with confidential 

business information. Ultimately, Setrakian decided to retain Ilanjian’s services, and the 

two men exchanged additional e-mails and communicated via Skype to work out the 

details of their arrangement and to plan a meeting in Geneva, Switzerland. 

The meeting never happened. Setrakian sent Ilanjian $20,000, after he requested it 

to cover expenses and arrangements before the trip to Geneva, but Setrakian continued to 

seek clarification of the fees (potentially 700,000 Swiss francs and $70,000 United States 

dollars per year for three years) for Ilanjian’s global infrastructure expenses and business 

turnaround services. Subseqently, Ilanjian insisted that an agreement had been reached1

while Setrakian expressed reservations about the arrangement and sought additional 

 

1

Ilanjian subsequently relied on some of the e-mails the men had exchanged. Ilanjian 

sent Setrakian what he termed a proposal, which he said would be final on Setrakian’s 

signature. Setrakian responded that he agreed with all terms but the payment term (he 

asked for additional discussion and understanding of the 700,000 Swiss francs). A 

subsequent e-mail from Setrakian refers to a phone call and thanks Ilanjian for 

understanding his inability to fund 700,000 Swiss francs in one payment and accepting 

two payments. Setrakian then stated that he would start making arrangements the next 

morning (although he also wrote that he looked forward to receiving confirmation of their 

plans and mentioned their meeting in Geneva and a planned phone call).
3

information. Ultimately, Ilanjian asserted that he had been appointed Interim Chairman 

and CEO of Kenset in charge of a corporate turnaround by virtue of an agreement with 

Setrakian and that Setrakian had breached the agreement. He demanded full and 

immediate payment under the terms of the agreement as he understood them, namely 

$210,000 in United States currency and 2,100,000 Swiss francs, plus a payment of 

1,700,000 Swiss francs for consulting services that he had previously stated would be 

provided without charge. Ilanjian also threatened unspecified serious consequences for 

non-payment and alleged that Setrakian was cheating one of its major business partners, 

financial and other institutions, and the government of the United Arab Emirates. 

Ilanjian later repeated his demand for immediate payment. 

Kenset sued Ilanjian for fraud, misappropriation of trade secrets, conversion, 

trespass to chattels, procuring information by improper means, replevin, and interference 

with economic advantage. Kenset sought the immediate return of all its confidential 

information; an injunction to prevent Ilanjian from disclosing or using any of its 

confidential information; a declaration that no contract was formed; damages; and 

attorney’s fees. With his answer (that included allegations that Setrakian was persecuting 

him and wanted to silence and kill him), Ilanjian filed a counterclaim for breach of 

contract. 

 
4

During the course of the District Court proceedings,2 Kenset sought discovery 

from Ilanjian with little success. Subsequently, Kenset sought sanctions against Ilanjian 

pursuant to Rule 37(b)(2)(A) of the Federal Rules of Civil Procedure. The requested 

sanctions included dismissal of the counterclaim and the entry of a default judgment in its 

favor. Kenset also sought summary judgment against Ilanjian.

The District Court denied in part and granted in part Kenset’s motion to impose 

sanctions for discovery violations, ruling that that certain facts, which Ilanjian had 

refused to address, would be deemed established. The District Court also granted 

summary judgment as to Kenset’s claims of misappropriation of trade secrets and 

procuring confidential business information. The District Court ordered Ilanjian to return 

specified confidential documents that had been provided to him by Setrakian and 

enjoined him from disclosing, using, or referring to those documents. In light of its 

ruling, the District Court did not consider Kenset’s claims of trespass to chattel, replevin, 

and conversion (and Kenset later withdrew those claims). The District Court also granted 

Kenset’s motion for summary for judgment on Ilanjian’s counterclaim for breach of 

contract, concluding that no contract had been formed (in the absence of sufficiently 

definite terms), but, even if it had, the contract was the product of fraudulent inducement 

and Ilanjian had not mitigated his damages. 

 

2 As we write primarily for the parties, we will discuss the facts only insomuch as they 

are relevant to our analysis. 
5

Ilanjian filed a timely notice of appeal (opening C.A. No. 12-3742). Kenset filed a 

motion to seal the record, which was provisionally granted, pending our review of it at 

this stage (Kenset also submits a motion to continue the seal). Ilajian opposes the efforts 

to maintain the seal and presents a motion to unseal the record. He has filed several other

motions during the pendency of his case, some of which we have already ruled on. One 

of his motions evidenced an intention to appeal the District Court’s subsequent order 

granting attorney’s fees to Kenset. We ruled that it should be considered as a notice of 

appeal, and, ultimately, another appeal was opened (C.A. No. 14-3255). The two cases, 

consolidated for disposition, are now fully briefed (although Kenset requests that 

Ilanjian’s supplemental brief regarding C.A. No. 14-3255 be struck from the record

because it goes outside the scope of the briefing instructions). Also, Ilanjian has 

submitted a motion for leave to file a supplemental appendix for C.A. 14-3255. 

Additionally pending are his motion for reconsideration of the Clerk’s Order granting 

Kenset leave to file a supplemental appendix in C.A. No. 12-3742 and his motion “to 

impose severe sanctions, disbar permanently and imprison Kenset and Setrakian 

lawyers.” 

We have jurisdiction pursuant to 28 U.S.C. § 1291. We review the imposition of 

sanctions for a discovery violation for abuse of discretion. See Saldana v. Kmart Corp., 

260 F.3d 228, 236 (3d Cir. 2001). We exercise plenary review over the District Court’s 

grant of summary judgment in favor of the defendants. Abramson v. William Patterson 
6

Coll., 260 F.3d 265, 276 (3d Cir. 2001). While we also consider de novo the legal 

question whether the District Court applied the proper standards in making a fee 

determination, its related factual findings are reviewed only for clear error, and the 

reasonableness of an award of attorney’s fees is reviewed for abuse of discretion. See

Loughner v. Univ. of Pittsburgh, 260 F.3d 173, 177 (3d Cir. 2001). We may affirm on 

any basis supported by the record. See Erie Telecomms., Inc. v. City of Erie, 853 F.2d 

1084, 1089 n.10 (3d Cir. 1988). Upon review, we will affirm the District Court’s 

judgment.3 

First, the District Court did not abuse its discretion in deeming some facts 

admitted. Despite Kenset’s many efforts, it was unsuccessful in getting meaningful 

discovery from Ilanjian. Ilanjian was generally uncooperative. For instance, he ignored

some requests and refused to answer others. Ilanjian also failed to voluntarily appear for 

his deposition three times. Ultimately, when his deposition was held in the federal 

courthouse under the supervision of the District Court, Ilanjian refused to answer many 

questions about his experience as a consultant and turnaround specialist, his past and 

present business activities, and the nature of the work he performed for Kenset. To 

 

3 We construe Ilanjian’s pro se brief liberally, although his arguments at times stray from

matters relevant to the District Court’s rulings. We focus on what we perceive to be his 

main challenges (and the orders he identifies), the ultimate judgment in favor of Kenset, 

predicated in part on an adverse ruling in a discovery matter, and the fee award against 

him. We also recognize that he maintains that the District Judge should have recused 

himself, but we conclude that his claims of bias, collusion, conspiracy, a criminal 

network behind Kenset’s allegations and the District Court’s rulings, and the like are 
7

summarize the three-day deposition (continued at one point because Ilanjian stated that 

he felt unwell), he refused to answer many questions on relevance grounds, and when the 

District Court told him that he must answer the questions because they were relevant and 

proper, he said that he would take the Fifth (and did so repeatedly). He made similar 

objections to interrogatories despite instruction from the District Court about the scope of 

the Fifth Amendment and relevance. At one point, when the District Court instructed 

him to answer a question because it related to relevant information that was not protected 

or privileged, Ilanjian countered, “that’s your opinion.” 

In considering the matter, the District Court undertook a comprehensive review of 

Ilanjian’s participation (and lack thereof) in the discovery process. The District Court 

concluded that Ilanjian bore responsibility for an almost complete absence of meaningful 

discovery, reviewed the prejudice to Kenset, and considered its previous efforts to win 

compliance from Ilanjian and the potential effectiveness of other or lesser sanctions. At 

the end of its analysis, the District Court carefully ruled that certain facts, which Ilanjian 

had refused to address, would be deemed established. We see no abuse of discretion in 

the District Court’s ruling.

We also conclude that the District Court did not err in granting summary judgment 

in favor of Kenset. To win an injunction for a misappropriation of a trade secret under 

the Pennsylvania Uniform Trade Secrets Act (“PUTSA”), Kenset had to show (1) the 

 

unfounded.
8

existence of a trade secret; (2) the communication of the trade secret pursuant to a 

confidential relationship; (3) the use or threatened use of the trade secret in violation of 

that confidence; and (4) harm. See 12 Pa. Cons. Stat. § 5303(a); Moore v. Kulicke & 

Soffa Indus., 318 F.3d 561, 566 (3d Cir. 2003); Den-Tal-Ez, Inc. v. Siemens Capital 

Corp., 566 A.2d 1214, 1232 (Pa. Super. Ct. 1989) (explaining that, for granting injunctive 

relief, the appropriately prospective inquiry asks “not whether defendant already has used 

or disclosed, but whether there is sufficient likelihood, or substantial threat, of defendant 

doing so in the future”). 

For the reasons given by the District Court, Kenset showed that it was entitled to 

the injunction it sought. To summarize (without repeating the District Court’s thorough 

analysis), Kenset presented evidence (that Ilanjian did not controvert) to show that the 

materials at issues were trade secrets, see Den-Tal-Ez, 566 A.2d at 1230; that they were 

disclosed as part of a confidential relationship, see Smith v. Dravo Corp., 203 F.2d 369, 

376 (7th Cir. 1953) (discussing Pennsylvania law); that Ilanjian procured the trade secrets 

by misrepresentation and threatened (for instance, via e-mail) to use those trade secrets in 

violation of the confidence between the parties; and that Kenset would suffer significant

harm from their disclosure. We agree that the permanent injunction was warranted under 

the circumstances of this case. 

We also agree with the District Court’s analysis of the claim that Ilanjian procured 

information by improper means. Under Pennsylvania law, an action for such a 
9

conversion of business information lies where another acquires confidential business 

information (trade secrets or other non-public information) through misconduct, which 

can include fraudulent misrepresentations. See Pierre & Carlo, Inc. v. Premier Salons, 

Inc., 713 F. Supp. 2d 471, 481-82 (E.D. Pa. 2010). As the District Court concluded, 

summary judgment was warranted given the evidence of the parties’ relationship, vis-àvis each other, see Sims v. Mack Truck Corp., 608 F.2d 87, 95 (3d Cir. 1979), and other

evidence in the record, including Ilanjian’s means of acquiring information from 

Setrakian, and his subsequent emails, that threatened, inter alia, disclosure of the 

information to a supplier with whom Kenset had a complicated business relationship.

Furthermore, the District Court properly granted summary judgment in favor of 

Kenset on Ilanjian’s counterclaim for breach of contract. For the reasons given by the 

District Court, a review of the evidence leads to the conclusion that no contract formed 

because any agreement between Ilanjian and Setrakian was not sufficiently definite. See

Johnston the Florist, Inc. v. TEDCO Constr. Corp., 657 A.2d 511, 516 (Pa. Super. Ct. 

1995) (en banc) (setting forth the elements of contract law in Pennsylvania and 

explaining how the existence of a contract is proved); Am. Eagle Outfitters v. Lyle & 

Scott Ltd., 584 F.3d 575, 582 (3d Cir. 2009) (describing how to determine parties’ intent 

to be bound and distinguishing between preliminary negotiations that do not constitute a 

contract from those negotiations that are binding even in the absence of a written 

agreement). 
10

Even if Ilanjian and Setrakian came to some sort of conclusion about the payment 

term (or if there was a genuine issue of material fact about that), so many other terms of 

the contract remained indefinite. As the District Court summed it up, it was unclear what 

consideration Setrakian would be given for the compensation offered. The District Court 

did not err in rejecting the possibility of partial performance in light of Setrakian’s 

transmittal of $20,000 to Ilanjian. In light of the evidence, that money was separate from 

the agreement and related to Ilanjian’s requests for money for expenses (including the 

possible refurbishment of his “Geneva offices”) in advance of the planned meeting to 

finalize their agreement in Switzerland.4 

Furthermore, even if the parties had reached an agreement, Kenset could rescind 

or avoid it because it had been fraudulently induced. See In re Allegheny Int’l, Inc., 954 

F.2d 167, 178-79 (3d Cir. 1992) (providing an overview of fraudulent inducement under 

Pennsylvania law). As the District Court determined, with the requisite knowledge and 

intent, Ilanjian made many material misrepresentations, on which, under the 

circumstances, Setrakian reasonably relied. Also, as the District Court concluded based 

on evidence in the record, including the facts deemed admitted, Ilanjian had failed to 

make any efforts to mitigate damages. See Prusky v. ReliaStar Life Ins. Co., 532 F.3d 

252, 257-58 (3d Cir. 2008) (discussing the obligation to mitigate). 

 

4

In light of the misrepresentations, we conclude, for the reasons given by the District 

Court, that Kenset is entitled to a return of the $20,000. 
11

For these reasons, and for the reasons provided by the District Court, the District 

Court properly granted summary judgment in favor of Kenset. As we noted, Ilanjian also 

challenges the award of attorney’s fees and nontaxable costs to Kenset. He presents 

various general objections to the award now.5 However, he did not raise substantive 

objections to the requested fee award in the District Court, despite being given repeated 

opportunities to do so.6 We will not consider his arguments for the first time on appeal. 

See Huck ex rel. Sea Air Shuttle Corp. v. Dawson, 106 F.3d 45, 51 (3d Cir. 1997). (We 

also will not consider any new evidence Ilanjian seeks to present for the first time on 

appeal. See In re Application of Adan, 437 F.3d 381, 389 (3d Cir. 2006).) In any event, 

his general arguments, that, for instance, the underlying action was “not complicated,” or 

his arguments relating to the merits of the case, are an insufficient basis for us to disturb 

the fee award. We will affirm that order, too.

In addition to affirming the District Court’s order and judgment, we grant –

in light of the sensitive and confidential information (including trade secrets) in the 

documents filed in this appeal – Kenset’s motion to seal the record on appeal, and to 

 

5

In his brief, he also repeats argument that he made in his initial brief. Although he 

seeks to raise issues that go beyond the fee matter, we do not strike the brief, as Kenset 

requests. We do again reject, however, Ilanjian’s repeated claims of bias, fabrication, 

conspiracy, and other misconduct by the District Judge, whom Ilanjian inappropriately 

maligns. 

6 He asserts that he did, indeed, challenge the request for a fee award in the District 

Court. We are not saying that he filed nothing; his filings in the District Court and on 

appeal have been voluminous. However, in his filings, we do not see anything equivalent 

to a substantive challenge to the fee award.
12

continue the provisional seal imposed at the outset of this action. See generally Pansy v. 

Borough of Stroudsburg, 23 F.3d 772 (3d Cir. 1994). We deny Ilanjian’s motion to 

unseal. We grant his motion to file a supplemental appendix. Also, we deny Ilanjian’s 

motion for reconsideration of the order permitting Kenset to file its supplemental 

appendix, and we deny his motion for severe sanctions against, and disbarment and 

imprisonment of, Kenset’s counsel.